New York Attorney General Andrew Cuomo is seeking information about contracts that colleges and universities in the state have with card issuers as part of an investigation into deceptive marketing tactics, according to AmericanBanker.com.
The office sent letters to approximately 300 schools questioning any exclusive contracts that they may have with debit and credit card issuers. The investigation stems from a nationwide investigation into the student loan industry the office started in 2007.
Schools have agreed with issuers to market affinity cards to alumni associations and students “with little or no evaluation of the terms or rates of the cards that could be marketed to students,” said Cuomo.
Some schools also have disclosed students’ personal contact details without their consent and some issuers have offered introductory interest rates without disclosing that the rates will raise after a teaser period ends. The newly passed CARD Act requires schools to publicly disclose such agreements and submit annual reports to the Federal Reserve outlining the terms of such arrangements.
The N.Y. attorney general noted, “With credit markets tightening in these uncertain financial times, there is even more reason today than ever before for university and college administrators to be vigilant about the safety and fairness of financial products and solicitations directed at their students, especially when such marketing is done with the imprimatur of the school. His office plans to review the finding to determine if there are any problematic practices that put students at risk.
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